Entity Types and Categories
The following Definitions provide basic, general information about the Entity Types
and Categories listed. It is recommended that you consult with an attorney or a
tax professional in order to determine the entity type that is most appropriate
for your anticipated business activities.
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Entity Type
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Definition |
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Business Trust |
A business trust is an unincorporated association whose governing instrument, sometimes
referred to as a declaration of trust, provides that one or more trustees will manage
property or conduct for-profit business activities on behalf of one or more beneficial
owners. A business trust is a separate legal entity and, generally, its trustees
and beneficial owners are not liable for the obligations of the business trust. |
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Corporation |
A corporation is an artificial person or legal entity managed by a board of directors,
consisting of one or more individuals, who collectively elect officers to run the
corporation’s day-to-day business activities. There are two types of corporations
in Virginia, stock corporations, which are authorized to issue shares to persons
who become shareholders, the owners of the corporation, and nonstock corporations,
which may have members, but not owners. Stock corporations are usually formed to
generate a profit for the shareholders. Nonstock corporations are usually organized
for not-for-profit purposes, such as a tax-exempt, charitable organization or a
property owners’ association. Generally, officers, directors, shareholders and members
are not liable for the obligations of the corporation. |
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General Partnership |
A general partnership (sometimes simply referred to as a “partnership”) is an association
of two or more persons to carry on, as co-owners, a business for profit. Each partner
contributes money, property and/or services in return for an interest in the general
partnership, shares in the profits and losses of the general partnership’s business,
and has equal rights in the management and conduct of the partnership’s business.
A general partnership is an entity distinct from its partners, but unless the general
partnership is registered as a registered limited liability partnership (see this
category, below), each partner is liable for the obligations of the general partnership.
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Limited Liability Company |
A limited liability company is an unincorporated association of one or more members
(the owners) who share in the profits and losses of the company’s business. It is
managed in accordance with an operating agreement by one or more members (member-managed)
or by one or more managers (manager-managed). A limited liability company is a separate
legal entity and, generally, the members and managers are not liable for the obligations
of the limited liability company. |
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Limited Partnership |
A limited partnership, which is a type of partnership distinct from a general partnership,
is formed by two or more persons with at least one general partner and one limited
partner. The general partners exercise control over the management of the limited
partnership’s business. The limited partners contribute money, property and/or services
in return for an interest in the partnership, and share in the profits and losses
of the limited partnership with the general partners in accordance with a written
partnership agreement or, if there is none, the value of the unreturned contributions
made by each partner. A limited partnership is an entity distinct from its partners.
Generally, the limited partners are not liable for the obligations of the limited
partnership. Unless the limited partnership is registered as a registered limited
liability partnership (see this category, below), however, each general partner
is liable for the obligations of the limited partnership.
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The following are categories within and across various business entity types.
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Category
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Definition |
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Benefit Corporation |
A benefit corporation is a Virginia stock corporation whose articles of incorporation
provide that it is a benefit corporation and that has, as one of its purposes, the
purpose of creating a general public benefit on society and/or the environment.
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Cooperative |
A cooperative is a stock or nonstock corporation that is organized to conduct, on
a cooperative plan for the mutual benefit of its members, any housing, agricultural,
fishing, dairy, mercantile, merchandise, brokerage, water, sewer, manufacturing,
service or mechanical business, or to represent or provide financing for cooperative
associations, societies, companies or exchanges. |
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Foreign Business Entity |
A foreign business entity is a business trust, corporation, general partnership,
limited liability company or limited partnership that has been incorporated, organized
or formed under the laws of a state or jurisdiction other than Virginia. |
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Professional Corporation |
A professional corporation is a stock or nonstock corporation that is organized
for the sole and specific purpose of rendering the professional service of pharmacists,
optometrists, physical therapists, physical therapist assistants, practitioners
of the healing arts, nurse practitioners, practitioners of the behavioral science
professions, veterinarians, surgeons, dentists, architects, professional engineers,
land surveyors, certified landscape architects, certified interior designers, public
accountants, certified public accountants, attorneys-at-law, insurance consultants,
audiologists, speech pathologists or clinical nurse specialists. |
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Professional Limited Liability Company |
A professional limited liability company is a limited liability company that is
organized for the sole and specific purpose of rendering a professional service
that can be performed by a professional corporation. |
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Public Service Company
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A public service company is a business entity that conducts business as a gas, pipeline,
electric light, heat, power, water supply, sewer, telephone or telegraph company,
or as a common carrier of passengers or property. Generally, the business activities
of a public service company are subject to regulation by a Virginia and/or federal
governmental agency. |
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Registered Limited Liability Partnership
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A registered limited liability partnership (sometimes referred to as a limited liability
partnership) is a status granted to a general partnership or a limited partnership
that has registered for such status in the jurisdiction of its formation. Upon registration,
the partners of a general partnership and the general partners of a limited partnership
are not liable for the obligations of the general partnership or limited partnership
that arise after registration. |
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Registered Limited Liability Limited Partnership
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A registered limited liability limited partnership is the term that applies to a
limited partnership that has registered for status as a registered limited liability
partnership. |
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